Giant Saudi fund emerges as backer of bid for Elon Musk's Tesla

Giant Saudi fund emerges as backer of bid for Elon Musk's Tesla

The other suit claims that with media reports confirming the dozen banks and investor funds usually involved in Silicon Valley tech deals were not committed to fund a Tesla buyout, Musk's tweet was false and dishonest.

Discussions began before the controversial August 7 tweet by Musk, who is Tesla's co-founder and chief executive officer, saying he was weighing a plan to take the company private. Saudi's sovereign fund - Public Investment Fund - had built almost five percent stake before Musk's tweet.

But Isaacs said Tesla's and Musk's conduct caused the volatility that cost short-sellers hundreds of millions of dollars from having to cover their short positions, and caused all Tesla securities purchasers to pay inflated prices. While the entrepreneur owns 20 per cent of Tesla, more than US$60 billion would be needed to buy the business from public shareholders.

The company later published an email sent by Musk to the company's employees outlining how the company might be taken private, yet still provide stock options for existing shareholders. Musk and SoftBank Group's Masayoshi Son held talks a year ago that touched on taking Tesla private, two people with knowledge of the discussions have said.

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Musk's tweet announcing the deal shocked investors. But doubts over the financing of a transaction to go private, and warnings from securities lawyers and experts that his tweet could have broken the law, wiped out most of the stocks' gains over the course of the week.

"Doing our best with the limited information we have, we come to the conviction that Tesla is unlikely to go private, and anticipate the board will reject Elon Musk's offer or approach", New Street's Pierre Ferragu, who has a $530 price target for the stock, said in a report Monday. But Tesla shares were up only minimally in early trading, suggesting investors are yet to be convinced. Musk and SoftBank Group's Masayoshi Son held talks past year that touched on taking Tesla private, two people with knowledge of the talks have said. It also reflects the fact that Tesla, once the clear leader in the electric-car market, is facing increasing competition and has yet to deliver on its mass production ambitions.

After meeting with the Saudi Public Investment Fund about their purchase of a 5% stake in Tesla, Musk said the delegation asked for another meeting, which took place on July 31. The government is planning to turn the PIF into a $2 trillion powerhouse to help diversify the kingdom's oil-dependent economy. The Saudi fund hasn't made any firm decisions on whether to increase its stake, or by how much, but talks are ongoing, they said.

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